For ex ample: What is the present value of $2,000 per year for 10 years assuming an annual interest rate of 9%. The founder asked you for $220,000 today and you expect to get $1,070,000 in 9 years. Ignore income taxes. [22] also highlight the importance of power companies improving investment portfolio planning for various energy production resources to ensure expected production value and reduce risk. The FV of $1. Assume Peng requires a 15% return on its investments. Compute the net present value of this investment. What is the annual depreciation expense using the straight line method? Management predicts this machine has a 8-year service life and a $100,000 salvage value, and it uses str, Carla Company owns equipment that cost $1,044,000 and has accumulated depreciation of $440,800. Compute the net present value of this investment. The investment costs $45,600 and has an estimated $6,600 salvage value Compute the accounting rate of return for this investment, assume the company uses straight-line depreciation. Accounting Rate of Return = Net Income / Average Investment. Which option should the company choose to invest in? Footnote 7 Although DS567 refers to paragraph (b)(iii) of article 73 of the TRIPS, considering its high coincidence with the text of article XXI of the GATT and the consistency of "judicial practice" of the panel in the specific trial process, Footnote 8 this chapter will categorize both sources as a security . Peng Company is considering an investment expected to generate an average net income after taxes Peng Company is considering an investment expected to generate an average net income after taxes of $1,950 for three years. What is the most that the company would be willing to invest in this project? Ronis' investment in asset base is $1,500,000, and they assume a capital charge of 10%. Negative amounts should be indicated by a minus sign.) What amount should Elmdale Company pay for this investment to earn a 8% return? Peng Company is considering an investment expected to generate an average net income after taxes of $2,900 for three years. The initial cost and estimates of the book value of the investment at the end of the year, the net cash flows for each year, and the net income, Crane Company is considering an investment that will return a lump sum of $898, 900, 6 years from now. The investment costs $49,800 and has an estimated $11,400 salvage value. Assume Peng requires a 10% return on its investments. Compute the accounting sane of return for this investment assume the company uses straight-line depreciation. Apex Industries expects to earn $25 million in operating profit next year. The investment costs$45,000 and has an estimated $6,000 salvage value. Peng Company is considering an investment expected to generate an average net income after taxes of $1,950 for three years. a) construct an influence diagram that relates these variables What investment(s) should the firm make according to net present v, Unrealized gains or losses on available-for-sale investments occur when a company adjusts the investment to : A) average value when an asset is disposed B) average value but has not yet disposed of the asset C) fair value when an asset is disposed D) f, Finnegan Company plans to invest in a new operating plant that is expected to cost $500,000. the net present value of this investment. The company's required rate of return is 10% for this class of asset. Compute. projected GROSS cash flows from the investment are $150,000 per year. The investment costs $56,100 and has an estimated $7,500 salvage value. The system, A machine costs $700,000 and is expected to yield an after-tax net income of $30,000 each year. Input the cash flow values by pressing the CF button. The present value of the future cash flows at the company's desired rate of return is $100,000. Peng Company is considering an investment expected to generate an average net income after taxes of $2,100 for three years. The asset has an estimated salvage value of $12,000, and an estimated useful life of 10 years. Capital investment - $15,000 Estimated useful life - 3 years Estimated salvage value - zero Estimated net cash inflow: -Year 1 - $7,00, Compute the net present value of each potential investment. an average net income after taxes of $3,200 for three years. Compute the net present value of this investment. The investment costs $52,200 and has an estimated $9,000 salvage value. Assume Peng requires a 15% return on its investments. Assume that the company can invest m, For the year 2015, Ronis Corporation earned a profit of $360,000 on total sales revenue of $2,000,000. For l6, = 8%), the FV factor is 7.3359. The cost of the asset is $700,000 and it will be depreciated using s, The MoMi Corporation's income before interest, depreciation and taxes, was $1.7 million in the year just ended, and it expects that this will grow by 5% per year forever. The company is currently considering an investment that is expected to generate annual cash inflows of $10,000 for 6 years. The initial cost and estimates of the book value of the investment at the end of each year, the net cash flows for each year, and the net income, Drake Corporation is reviewing an investment proposal. The company's required r, Strauss Corporation is making an $85,900 investment in equipment with a 5-year life. gifts. The company is expected to add $9,000 per year to the net income. QS 24-8 Net present value LO P3 Assume Peng requires a 15% return on its investments. Peng Company is considering an investment expected to generate Select chart Peng Company is considering an investment expected to generate an average net income after taxes of $3,500 for three years. The company has projected the following annual for the investment. Specifically, by bringing remanufacturing into consideration, this paper examines a manufacturer that has four alternative carbon abatement strategies: (1) do nothing, (2) invest in carbon . distributed with a mean of 78 when mixing oil and water is the change in entropy positive or The machine will cost $1,824,000 and is expected to produce a $206,000 after-tax net income to be re. b) 4.75%. a. Equity method b. (Round answer to 2 decimal places. Assume Peng requires a 5% return on its investments. We reviewed their content and use your feedback to keep the quality high. The management of Bischke Corporation is investigating an investment in equipment that would have a useful life of 8 years. 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TABLE B.3 Present Value of an Annuity of 1 Rat Periods 1% 2% 4% 5% 6% 7% 5% 10% 12% 15% 0.9901 0.9804 0.9709 0.9615 0.9524 0.9434 0.9346 0.9259 0.9174 0.9091 0.8929 0.8696 1.9704 1.9416 1.9135 1.88611.8594 1.8334 8080 1.7833 1.759 .7355 16901 1.6257 2.9410 2.8839 2.8286 2.7751 2.7232 2.6730 2.6243 2.5771 2.5313 2.4869 2.4018 2.2832 3.9020 3.8077 3.7171 3.6299 3.5460 3.4651 3.3872 3.3121 3.2397 3.1699 3.0373 2.8550 3.9927 3.8897 3.7908 3.6048 3.3522 5.7955 5.6014 5.4172 5.2421 5.0757 4.9173 4.7665 4.6229 4.4859 4.3553 4.1114 3.7845 5.3893 5.2064 5.0330 4.8684 4.5638 4.1604 7.6517 7.3255 7.0197 6.73276.4632 6.2098 5.9713 5.7466 5.5348 5.3349 4.9676 4.4873 8.5660 8.1622 7.7861 7.4353 7.1078 6.8017 6.5152 6.2469 5.9952 5.7590 5.3282 4.7716 9.4713 8.9826 8.5302 8.1109 7.7217 7.3601 7.0236 6.7101 6.4177 6.1446 5.6502 5.0188 7.1390 6.8052 6.4951 5.93775.2337 11.255 10.5753 9.95409.3851 8.8633 8.3838 7.9427 7.5361 7.1607 6.8137 6.1944 5.4206 12.1337 11.3484 10.6350 9.9856 9.3936 8.8527 8.3577 7.9038 7.4869 7.1034 6.4235 5.5831 13.0037 12.1062 11.2961 10.5631 9.8986 9.2950 8.7455 8.2442 7.7862 7.3667 6.6282 5.7245 13.8651 .8493 11.9379 11.1184 10.3797 9.7122 9.1079 8.5595 8.0607 7.6061 6.8109 5.8474 14.7179 13.5777 12.5611 11.6523 10.8378 10.1059 9.4466 8.8514 8.3126 7.8237 6.9740 5.9542 15.5623 14.2919 13.1661 12.1657 11.2741 10.4773 9.7632 9.1216 8.5436 8.0216 7.1196 6.0472 16.3983 14.9920 13.7535 12.6593 11.6896 10.8276 10.0591 9.3719 8.7556 8.2014 7.2497 6.1280 17.2260 15.6785 14.3238 13.1339 12.0853 11.1581 10.3356 9.6036 8.9501 8.3649 7.3658 6.1982 18.0456 16.3514 14.8775 13.5903 12.4622 11.4699 10.5940 9.8181 9.1285 8.5136 7.4694 6.2593 22.0232 19.5235 17.4131 15.6221 14.0939 12.7834 11.6536 10.6748 9.8226 9.0770 7.8431 6.4641 25.8077 22.3965 19.6004 17.2920 5.3725 13.7648 12.4090 11.2578 10.2737 9.4269 8.0552 6.5660 29.4086 24.9986 21.4872 18.6646 16.3742 14.4982 12.9477 11.6546 10.5668 9.6442 8.1755 6.6166 32.8347 27.3555 23.1148 19.7928 17.1591 15.0463 13.3317 11.9246 10.7574 9.7791 8.2438 6.6418 4.8534 4.7135 4.57974.4518 4.3295 4.2124 4.1002 6.7282 6.4720 6.2303 6.0021 5.7864 5.5824 10.3676 9.7868 26 8.7605 8.3064 7.8869 7.4987 12 13 14 15 16 19 20 25 30 35 40 Used to calculate the present value of a series of equal payments made at the end of each period. Peng Company is considering an investment expected to generate an average net income after taxes of $1,950 for three years. If a table of present v, A company can buy a machine that is expected to have a three-year life and a $29,000 salvage value. The management predicts that this machine has a 10-year services life and a $100,000 salvage value, and, The Placque Company purchased an office building for $4,555,000. Assume Peng requires a 5% return on its investments. The investment costs $57.600 and has an estimated $8,400 salvage value. Get access to this video and our entire Q&A library, How to Calculate Net Present Value: Definition, Formula & Analysis. Assume the company uses Accounting Rate of Return Choose Numerator: Choose Denominator: Accounting Rate of Return nnual after-tax net incomeAnnual average investentAccounting rate of return 3,500S 27,1501= 12.891 % The equipment will be depreciated on a straight-line basis over 5-year life and is expected to generate net cash inflows of $45,000 the first year, $65,000 the second year, and $, The Seago Company is planning to purchase $436,400 of equipment with an estimated seven-year life and no estimated salvage value. The company s required rate of return is 13 percent. The asset has no salvage value. Peng Company is considering an investment expected to generate an average net income after taxes of $3,100 for three years. Management predicts this machine has a 10-year service life and a $105,000 salvage value, and it uses straight-line depreciation. Melton Company's required rate of return on capital budgeting projects is 16%. What is the depreciation expense for year two using the straight-line method? Question. Compute the accounting rate of return for this investment; assume the company uses straight-line depreciation. For example: What is the future value of $4,000 per ye ar for 6 years assuming an annual interest rate of 8%. What is Roni, You are considering an investment in First Allegiance Corp. Using the original cost of the asset, what will be the unadjusted rat, A company can buy a machine that is expected to have a three-year life and a $31,000 salvage value. The machine will cost $1,780,000 and is expected to produce a $195,000 after-tax net income to be re, A company can buy a machine that is expected to have a three-year life and a $33,000 salvage value. The initial outlay of the project would be $800,000 and the project's assets would have a residual value of $50,000 at the end o. Management predicts this machine has a 10-year service life and a $100,000 salvage value, and it uses straight-line depreciation. Compute the net present value of this investment. The investment costs $45,600 and has an estimated $8,700 salvage value. Required information Use the following information for the Quick Study below. 2. (FV of |1, PV of $1, FVA of $1 and PVA of $1). Flower Company is considering an investment which will return a lump sum of $2,500,000 six years from now. A. The investment costs $45,000 and has an estimated $6,000 salvage value. What amount should Flower Company pay for this investment to earn an 11% return? The company uses the straight-line method of depreciation and has a tax rate of 40 percent. A company purchased a plant asset for $55,000. The net income after the tax and depreciation is expected to be P23M per year. The company uses the straight-line method of depreciation and has a tax rate of 40 percent. The company anticipates a yearly net income of $3,800 after taxes of 16%, with the cash flows to be received evenly throughout each year. The investment costs $54,000 and has an estimated $7,200 salvage value. c) Only applies to a business organized as corporations. A machine costs $190,000, has a $10,000 salvage value, is expected to last nine years, and will generate an after-tax income of $30,000 per year after straight-line depreciation. The company has projected the following annual cash flows for the investment. Accounting 202 Final - Formulas and Examples. Compu, Lanyard Company is considering an investment that will generate $600,000 in cash inflows per year for 7-years and has $240,000 of cash outflows for the same period (before income taxes). Compute the payback period. Peng Company is considering an investment expected to generate an average net income after taxes of $2,700 for three years. Peng Company is considering an investment expected to generate an average net income after taxes of $2,000 for three years. PVA of $1. The management of Samsung is planning to invest in a new companywide computerized inventory tracking system. The investment costs $45,000 and has an estimated $6,000 salvage value. (Round your computations and answers to 0 decimal p, BAP Corporation is reviewing an investment proposal. a. Compute Loon s taxable inco. ), The net present value of the investment is -$6,921. (Round answer to, During the year, Loon Corporation has the following transactions: $400,000 operating income; $325,000 operating expenses; $25,000 municipal bond interest; $60,000 long-term capital gain; and $95,000 short-term capital loss. The investment costs $45,000 and has an estimated $6,000 salvage value. Zhang et al. Solution: Annual depreciation = (Cost - Salvage value) / useful life = ($45,600 - $8,700) / 3 = $12,300 Annual cash i. The initial cost and estimates of the book value of the investment at the end of each year, the net cash flows for each year, and, The Zinger Corporation is considering an investment that has the following data: Cash inflows occur evenly throughout the year. value. The investment costs $45,000 and has an estimated $10,800 salvage value. ROI is equal to turnover multiplied by earning as a percent of sales. Good estimates are available for the initial investment and the a, Pito Company has been in operation for several years. The Action Plan for Soil Pollution Prevention and Control ("10-point Soil Plan") provides the top-level design for soil environmental protection in China and motivates heavy polluters to participate in soil pollution prevention and control. Assume Peng requires a 15% return on its investments. Peng Company is considering an investment expected to generate an average net income after taxes of $3,000 for three years. Yea, A company projects an increase in net income of $40,000 each year for the next five years if it invests $500,000 in new equipment. The NPV is computed as: {eq}\displaystyle \text{Present value of annuity (PVA) } = P * \frac{1 - (1 + r)^{-t}}{r} {/eq}, Become a Study.com member to unlock this answer! Req, CPA corporation is considering an investment with a cost of $5,000,000 an estimate useful life of 5 years, and no salvage value. What is the minimum salvage value that would make the investment attractive assuming a discount rate of 12%? 15900 The investment costs $47,400 and has an estimated $8,400 salvage value. Management estimates that this machine will generate annual after-tax net income of $540. 0.9, Merrill Corp. has the following information available about a potential capital investment: Initial investment $1,800 000 Annual net income $200,000 Expected life 8 years Salvage value $240,000 Merrill's cost of capital 10% Assume the straight-line deprec, Drake Corporation is reviewing an investment proposal. Since bond yields are expected to stay low and public equity returns are likely to be below historical annualized returns over the next 10 years, institutional investorspension funds, insurance companies, endowments, foundations, investment companies, banks, and family officesare increasing allocation to private capital. Management predicts this machine has a 10-year service life and a $100,000 salvage value, and it uses straight-line depreciation. Compute the accounting rate of return for this investment; assume the company uses straight-line depreciation. Ignoring taxes, what is the most that the company would be willing to in, Strauss Corporation is making a $89,600 investment in equipment with a 5-year life.The company uses the straight-line method of depreciation and has a tax rate of 40 percent.The company's required rat, Strauss Corporation is making a $89,750 investment in equipment with a 5-year life.The company uses the straight-line method of depreciation and has a tax rate of 40 percent.The company's required rat, Strauss Corporation is making a $91,950 investment in equipment with a 5-year life. Assume the company uses straight-line depreciation. You'll get a detailed solution from a subject matter expert that helps you learn core concepts. investment costs $48,900 and has an estimated $12,000 salvage Q: Peng Company is considering an investment expected to generate an average net. Question: Peng Company is considering an investment expected to generate an average net income after taxes of $3,500 for three years. The net present value of the investment is A) $1,470 B) ($13,550) C) $6,450, The Zinger Corporation Is considering an Investment that has the following data: Cash Inflows occur evenly throughout the year. Compute this machine's accoun, A machine costs $300,000 and is expected to yield an after-tax net income of $9,000 each year. The company has an all-equity capital structure, and its cost of equity capital is 15 percent. Trading securities (fair value) = $70,000 Available-for-sale securities (fair value) = $40,000 Held-to-maturity securities (amortized cost) = $47,000 At what amount will Ahnen report investments in its current, A company is contemplating investing in a new piece of manufacturing machinery. If a table of present v, Grouper Company owns equipment that cost $1,044,000 and has accumulated depreciation of $440,800. The company is considering an investment that would yield a cash flow of $12,000 per year for five years. The estimated cash flow for the investment are as follows: N Description Cash flow ($) 0 price of the system Fo 1-4 revenue per, Joe Sixpack Inc. is considering an investment that will cost is $400,000. The product line is estimated to generate cash inflows of $300,000 the first year, $250,000 the second year, and $200,000 each year thereafter for ten more years. Compute the payback period. d) 9.50%. Yearly net cash inflows (before taxes) from the machine are estimated at $140,000. Required information (The following information applies to the questions displayed below.) The equipment has a useful life of 5 years and a residual value of $60,000. Prepare the journal, You have the following information on a potential investment. A. Required information (The following information applies to the questions displayed below.] QS 25-7 Computation of accounting rate of return LO P2 Compute the accounting rate of return for this investment; assume the company uses straight-line depreciation. What is the current value of the company? Assume Peng requires a 10% return on its investments. The company is considering an investment that would yield an after-tax cash flow of $30,000 in four years. To help in this, compute the cost of capital for the firm for the following: a. What is the present value, The Best Manufacturing Company is considering a new investment. What is the payback period in years ap, The Montana Company has decided to invest in a project that is expected to produce the following cash flows: $12,500 (year 1), $14,000 (year 2) and $9,000 (year 3). Accounting Rate of Return Choose Denominator: Choose Numerator: T = Accounting Rate of Return = Accounting rate of return 0, Required Information [The following information applies to the questions displayed below) Peng Company is considering an investment expected to generate an average net income after taxes of $1950 for three years. prosun tanning beds,

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